International Advisory and Monitoring Board on the Development Fund for Iraq

Press Release
May 23, 2005

Statement by the International Advisory and Monitoring Board on the Development Fund for Iraq

"The IAMB has been presented with the final audit reports by KPMG covering the audits of Iraq's oil export sales and the Development Fund for Iraq (DFI) operations for the period starting with the dissolution of the Coalition Provisional Authority (CPA) on June 29, 2004 and ending December 31, 2004. The reports are available on the IAMB website (www.iamb.info), together with the minutes of the most recent IAMB meeting to provide context for the overall audit findings. The audit reports supplement earlier reports covering the periods from May 23, 2003 to June 28, 2004. The audits were conducted under the oversight of the IAMB, in line with its mandate under UN Security Council Resolution 1546.

"The audit reports continue to be critical of the controls in place in the spending ministries, the U.S. agencies in respect of the outstanding commitments using DFI resources, and the Iraqi administration of DFI resources. The main weaknesses include: (i) incomplete DFI accounting records; (ii) untimely recording, reporting, reconciliation and follow-up of spending by Iraqi ministries; (iii) incomplete records maintained by U.S. agencies, including disbursements that were not recorded in the Iraqi budget; (iv) lack of documented justification for limited competition for contracts at the Iraqi ministries; (v) unreconciled quantities of oil and oil products exported indicating a lack of control and possible misappropriation of oil revenues, and significant difficulties in ensuring completeness and accuracy of Iraqi budgets and controls over expenditures; and (vi) non-deposit of proceeds of export sales of petroleum products into the appropriate accounts in contravention of UNSCR 1483.

"The IAMB has invited the Government of Iraq to act on the audit recommendations to strengthen financial controls and the administration of DFI resources."